Stretching higher

Market Review

Malaysia:. The FBM KLCI (+1.4%) delivered a solid performance with more than 20 key index components advanced, cheering on the less hawkish outlook tone from the US Federal Reserve. The lower liners also extended their lead, while the healthcare sector (-0.2%) was the sole underperformer on the broader market.

Global markets:. Wall Street extended their rebound as the Dow (+1.0%) rose in the anticipation that the US Federal Reserve to be less aggressive in future rate hikes amid potentially slower economic growth in 2H22. Both the European and Asia stock markets ended mostly upbeat.

The Day Ahead

The FBM KLCI rallied in a constructive Thursday session in tandem with the regional peers, taking cue from the strong gains on Wall Street. We believe the narrative that the US Fed will slow down the pace of interest rate hikes will continue to send positive signal to the regional and local bourses despite the contraction of GDP in the US. Meanwhile, Indonesia’s decision to lift its restrictions on the entry of its workforce into Malaysia starting 1st August 2022 should benefit the manufacturing and plantation sectors in Malaysia. Commodities wise, the crude oil price increased above USD107 per barrel mark, while the CPO price was traded above the RM4,000 level. Gold price has seen some uptick movement.

Sector focus:. The technology sector should continue to trend higher, in line with the overnight gains on Nasdaq, coupled with the solid results from UNISEM, FRONTKN, and VITROX released yesterday. Besides, the energy sector may continue to shine amid the firm crude oil prices.

FBMKLCI Technical Outlook

The FBM KLCI rose above its resistance at 1,480 and the daily EMA60 level after closing at its session high. Technical indicators remained positive as the MACD Histogram extended a positive bar, while the RSI hovered above the 50 level. Next resistance is set along 1,500-1,530, while the support is located around 1,450.

Company Brief

AMMB Holdings Bhd’s 51.0% subsidiary AmGeneral Holdings Bhd (AGHB) has completed the sale of AmGeneral Insurance Bhd (AGIB) to Liberty Insurance Bhd (LIB) for RM2.29bn. This follows the regulatory approval from the Minister of Finance and the signing of the share sale and purchase agreement with LIB. As part of the sales agreement, AMMB has received cash amounting to RM287.0m and a 30.0% stake in AGIB and LIB valued at RM939.0m. In addition, AMMB has entered into a 20-year new bancassurance partnership for the distribution of general insurance products as part of the transaction. (The Star)

Lotte Chemical Titan Holding Bhd’s (LCT) 2QFY22 net loss stood at RM145.9m vs. a net profit of RM382.3m recorded in the previous corresponding quarter, mainly due to margin squeeze resulting from 64.0% YoY increase in feedstock cost, write down of inventories to a net realisable value of RM96.5m and decline in results of its associated company, Lotte Chemical USA Corp. Revenue for the quarter, however, rose 11.0% YoY to RM2.82bn. (The Star)

Maxis Bhd’s 2QFY22 net profit declined 8.6% YoY to RM329.0m, due to higher depreciation and amortisation costs, as well as the one-off prosperity tax. Revenue for the quarter, however, climbed 6.6% YoY to RM2.42bn. A second interim dividend of 5.0 sen per share, payable on 30th September 2022 was declared. (The Edge)

Unisem (M) Bhd's 2QFY22 net profit surged 276.7% YoY to RM205.9m, on the back of higher average selling prices, coupled with the appreciation of USD/MYR exchange rates. Revenue for the quarter grew 15.4% YoY to RM464.1m. An interim dividend of 2.0 sen per share, payable on 25th August 2022 was declared. (The Edge)

Nestlé (Malaysia) Bhd’s 2QFY22 net profit rose 26.1% YoY to RM169.7m, on the back of increased sales. Revenue for the quarter added 18.8% YoY to RM1.64bn. An interim dividend of 70 sen per share, payable on 6th October 2022 was declared. (The Edge)

Westports Holdings Bhd's 2QFY22 net profit slipped 8.8% YoY to RM162.3m, as higher fuel costs offset the higher container revenue. Revenue for the quarter, however, rose 1.2% YoY to RM511.0m. A first interim dividend of 6.91 sen per share, payable on 23rd August 2022 was declared. (The Edge)

Pavilion Real Estate Investment Trust’s (Pavilion REIT) 2QFY22 net property income jumped 74.5% YoY to RM83.1m, on higher revenue, while operating expenses declined after the economy reopened. Revenue for the quarter grew 13.4% YoY to RM124.8m. An interim income distribution of 4.08 sen per unit, payable on 2nd September 2022 was declared. (The Edge)

Bursa Malaysia Bhd’s 2QFY22 net profit decreased 33.2% YoY to RM59.5m, due weaker revenue impacted by domestic and global developments, including global inflationary pressures. Revenue for the quarter declined 42.1% YoY to RM66.8m. (The Edge)

Vitrox Corp Bhd’s 2QFY22 net profit rose 1.4% YoY to RM51.4m, thanks to the stronger USD. Revenue for the quarter, however, decreased 3.5% YoY to RM189.4m. (The Edge)

Frontken Corporation Bhd’s 2QFY22 net profit rose by 30.2% YoY to RM32.2m, on the back of improved revenue and better profit margins. Revenue for the quarter added 18.0% YoY to RM128.2m. A first interim dividend of 1.60 sen per share, payable on 20th September 2022 was declared. (The Edge)

MI Technovation Bhd’s 2QFY22 net profit fell 28.5% YoY to RM18.7m, due to expansion expenses, and higher material and logistics costs. Revenue for the quarter fell 20.0% YoY to RM93.6m. (The Edge)

Samchem Holdings Bhd’s 2QFY22 net profit decreased 5.4% YoY to RM18.2m, due to narrower margin as a result of a challenging business environment. Revenue for the quarter slipped 1.3% YoY to RM366.7m. A second interim dividend of 1.0 sen per share was proposed. (The Edge)

KIP Real Estate Investment Trust (KIP REIT)’s 4QFY22 net property income dropped 5.8% YoY to RM14.2m, due to higher utilities expenses and lower gross revenue. Revenue for the quarter fell 0.9% YoY to RM19.2m. A distribution per unit of 2.1sen, payable on 25th August 2022 was declared. (The Edge)

Bintai Kinden Corp Bhd's joint-venture company has secured a series of additional subcontracts from Petro Flanges & Fittings Sdn Bhd to supply high-grade carbon steel/stainless steel piping, valves and piping accessories, with a value of RM4.4m, to companies in the oil and gas industry. (The Edge)

Yinson Holdings Bhd has inked an exclusivity agreement with bp Exploration (Angola) Ltd to reserve a floating production storage and offloading vessel for the latter’s proposed 10-well subsea Palas, Astrea and Juno Oil Fields (PAJ Project) in Angola. (The Edge)

Tasco Bhd's 70.0%-owned subsidiary Tasco Yusen Gold Cold (TYGC) has received the JSA-S1004:2020 certification from Japan's certification body Nippon Kaiji Kyokai (ClassNK), which indicates TYGC adheres to the standards for business-to business cold chain logistics services. (The Edge)

G Capital Bhd’s 70.0%-unit Solarcity Malaysia Sdn Bhd has inked a solar power purchase agreement (PPA) with Muda Holdings Bhd’s wholly-owned subsidiary Federal Packages Sdn Bhd for sale of solar energy to Federal Packages from a 5.5 megawatt-peak (MWp) solar asset in Pulau Pinang. The plant is expected to achieve commercial operation by 1Q23. (The Edge)

Solarcity and Chin Well Holdings Bhd unit Chin Herr Industries (M) Sdn Bhd have mutually agreed to downsize a planned solar rooftop asset to 2.5MWp, from the initial 3.0MWp proposed previously. The two parties inked a supplementary solar PPA to affect the revision. (The Edge)

Capital A Bhd’s aviation arm AirAsia Aviation Group Ltd said its unit AirAsia’s Advanced Air Mobility and Skyports Infrastructure have inked a letter of intent to explore the development of air taxi infrastructure in Malaysia. (The Edge)

Five directors of Caely Holdings Bhd have been appointed to the board of construction engineering group Top Builders Capital Bhd. They include Caely Chairman Datuk Loh Ming Choon, Executive Vice Chairman Wong Siaw Puie, Executive Director Datuk Seri Sin Hock Min, and Independent Directors Datuk Mohammad Hanafiah Zakaria and Ng Mei Choo. (The Edge)

QL Resources Bhd has highlighted the cost pressure it is facing amid supply chain disruption, and inflationary pressure will further narrow its margins. The risk of a recession had exacerbated the group’s operating condition, but stressed that QL will uphold its responsibility to provide Malaysians with nourishing and affordable protein sources. (The Edge)

SDS Group Bhd, which made a debut on Bursa Malaysia’s ACE Market in October 2019, has proposed to transfer its listing to the Main Market to enhance the group’s prestige and reputation. (The Edge)

Source: Mplus Research - 29 Jul 2022